How Does Power Factor Correction Impact Your Utility Bill? (.PDF Download)

This article is part of the Power Management Series: What’s the Difference Between Watts, RMS, and More?

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Your utility Power Factor is the ratio of the system’s Real Power and the Apparent Power. This unitless factor ranges from −1 to 1. The Power Factor ratio aptly describes the type of storage elements in the circuit and the stability of the current-to-voltage relationship. More importantly, for utility companies, this ratio provides insight into a user’s power consumption habits, enabling them to apply fees related to lower value Power Factors (usually below 0.80 or 0.85).